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Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
(UNDER SECTION 12 (B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934)
NorStar Group, Inc.
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(Name of Small Business Issuer in its Charter)
Incorporated in the State of Utah 59-1643698
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
6365 NW 6th Way, Suite 160, Ft. Lauderdale, Fl. 33309
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(Address of Principal executive offices) (Zip Code)
Issuer's Telephone number: (954)-772-0240
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Securities to be registered under section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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None N/A
Securities to be registered under section 12 (g) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Shares; and
Cumulative Preferred shares
Class A Shares and
Class B Shares
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NORSTAR GROUP, INC. FORM 10-SB
NorStar Group, Inc.
TABLE OF CONTENTS
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<S> <C> <C>
Item 1: Description of Business..................................................................................4
(a) Business Development................................................................................4
(b) Business of the Company.........................................................................4
i) Membership...................................................................................4
(ii) Providers..................................................................................5
(iii) Market Overview...........................................................................5
(iv) Summary of Product Research and Development................................................5
(c) Reports to Security Holders.........................................................................6
Item 2. Management's Discussion and Analysis or Plan of Operation................................................6
Results of Operations:...................................................................................7
Liquidity and Capital Resources..........................................................................8
Item 3. Description of Property.................................................................................12
Item 102 (a) 1. Small Business Issuer engaged in significant mining operations:........................12
Item 4. Security Ownership of Certain Beneficial Owners and Management..........................................13
Item 5. Directors, Executive Officers, Promoters and Control Persons............................................14
Item 6. Executive Compensation..................................................................................15
Item 7. Certain Relationships and Related Transactions..........................................................15
(a) Transactions With Management and Others: None..................................................15
(b) Certain Business Relationships: None...........................................................15
Part II ........................................................................................................16
Item 8. Legal Proceedings.......................................................................................16
Item 9. Market for Common Equity and Related Stockholder matters................................................16
Item 10. Recent Sales of Unregistered Securities.................................................................17
Item 11. Description of Securities...............................................................................17
Item 12. Indemnification of Directors and Officers...............................................................18
Part F/S ........................................................................................................19
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Item 13. Financial Statements....................................................................................19
Item 14. Changes In and Disagreement with Accountants on Accounting and Financial
Disclosure..............................................................................................19
Part III ........................................................................................................20
Item 15. Financial Statements And Exhibits.......................................................................20
Other Exhibits ..................................................................................................21
Signatures.......................................................................................................22
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NORSTAR GROUP, INC. FORM 10-SB
PART I
Item 1: Description of Business
(a) Business Development
NorStar Group, Inc., a Utah Corporation ("NorStar" or the
"Company") was originally formed in March 1961 as Florist
Accounting Service, Inc. The Company changed its name in 1971
to Luxor Group N.A., Inc. and in 1992 to NorStar Group, Inc.
NorStar has not been the subject of any bankruptcy,
receivership or similar proceeding. There has been no material
reclassification, merger, consolidation, or sale of a
significant amount of assets not in the ordinary course of the
Company's business. NorStar has made a number of acquisitions
over the last few years of businesses and investment
opportunities. In January, 1998, NorStar entered into an
agreement to acquire in their entirety, the Institute of
Metabolic Medicine, Metabolic Treatment Center, Inc., JBA
Medical Management, Inc., and Medical Providers of South West
Florida, Inc. In April, 1992, NorStar also acquired 680 acres
(17 gold mining claims) in Nevada. In March of 1999 NorStar
abandoned the medical venture to concentrate on its Internet
on-line business. NorStar is seeking a joint venture partner
to work its mining claims.
(b) Business of the Company: The business of NorStar is to create
an Internet online-community of "One Stop Shopping" for
products, entertainment, education and business services from
a network of providers. NorStar's portal will provide the
subscriber/member with access to several web browsers, a
directory of thousands of stores, an Internet shopping mall,
three dimensional virtual reality chat rooms, telephone chat,
forums, game rooms, a virtual reality dating service, virtual
reality business conference rooms using virtual reality chat
room technology, speciality advertising rooms with virtual
reality activities, and global e-mail service which can be
accessed through the web anywhere in the world.
(i) Membership:
NorStar intends to offer membership to the 100 million
consumers who currently have, or who will have some form of
access to the Internet. Consumers subscribing to NorStar's
network will be offered discounts for products and services
through the Company's provider network. NorStar's strategy is
to address the trend toward rising out of pocket costs by
bringing together a provider network that offers quality
products and services at reduced prices. The Company believes
that by having access to an extensive multi-service provider
network in a region its members will be able to receive
quality services and products at less than market prices. As a
result, NorStar believes that it can establish a market niche
where the discounts obtained by the membership will far
outweigh the cost of membership to join the NorStar network.
The cost for annual family membership is $120.00. NorStar
discounts are designed not to be related in any way to the
dollar amount of purchases, volume of buying or products so
members will not be subject to any minimum requirements or
other restrictions. The member is simply
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being provided these programs based on the willingness of
service and products providers to offer their services and
products to customers of the Company at a discount.
(ii) Providers:
The foundation of the Company's business will be the
development and maintenance of a network of providers
comprised of manufacturers, wholesalers, retailers and service
providers. NorStar intends that providers who participate in
the NorStar network will receive some of the following
benefits, including but not limited to: elimination of paper
order form preparation and supporting documentation, reduction
of bad debt, new customers with no additional advertising
expense, and more efficient utilization of personnel and
equipment. The national and regional marketing planned by the
Company should give providers an increased level of exposure.
The Company will also contract with reliable suppliers who
offer computer network accessible products and services. It is
the Company's objective to establish a national network of
providers within 3 years through direct contracts,
affiliations with national organizations and other regional
networks. NorStar anticipates having an appropriate number of
providers under contract and available on the net in the near
future. The distribution method of these products and services
to holders of membership will be via the Internet. No
assurances can be given that the Company will be successful in
establishing a national network. The failure to establish a
national network would have a material adverse effect on the
Company's business, financial condition and results of
operations.
(iii) Market Overview:
The market for discount products and services via the Internet
is in its infancy. The level of demand and acceptance of
discount products and services programs is dependent upon a
number of factors, including growth of consumer access to the
Internet, the Company's ability to develop and maintain
distribution channels to sell memberships to consumers,
acceptance of discounted products and services and the
willingness of service and product providers to offer their
services and products to customers at a discount. The Company
believes that competition will intensify and increase in the
future. NorStar views its primary direct competitors as AOL,
Compuserve, Prodigy, Yahoo, and GeoCities.
(iv) Summary of Product Research and Development:
NorStar's publicly announced new product and service includes
the Cybervisor which is still in the research and development
stage. NorStar filed a Trademark Application for The
"Cybervisor" a head mounted display unit with related hardware
and software INT. Class:009 The mark consists of text letters
(the Cybervisor) Serial number 75/710459. NorStar announced
that its Cybervisor (Trademark) IPD (Interactive Personal
Display) unit will be offered in the marketplace for home,
business and school use. NorStar plans to introduce three IPD
models: The Cybervisor (Trademark), The Super Cybervisor
(Trademark), and the Cybervisor Jr. (Trademark). In addition,
NorStar has completed development of a new Web based community
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called "VeeAreCity.Com". VeeAreCity.Com, Inc., a Delaware
corporation and wholly-owned subsidiary of the Company
("VeeAreCity") owns and will operate the Web site. The
physical tooling developed for the VeeAreCity Head Mounted
Display ("HMD") appearance will be owned by VeeAreCity. The
tooling for the HMD will be located at Interactive Imaging
Systems ("IIS"), the manufacturer. As a significant portion of
this HMD design is based on proprietary IIS technology, IIS
will retain the rights, title and ownership to this
technology. In the event IIS is unable or unwilling to
manufacture the HMD, VeeAreCity will be granted certain rights
to have the product manufactured by a mutually agreed upon
third party, at the anticipated volume levels of 100,000
units/year. IIS estimates that it will be able to manufacture
the HMD for VeeAreCity at a per unit cost of approximately
$200. This price is subject to change up or down based on the
final product specifications. NorStar also plans to begin
construction of its "Cybernizer" a web pager. In addition, the
Cybernizer will be a Internet navigation tool that will
include such features as voice chat and instant access to all
major search engines. The estimated cost for the development
of this project is between $900,000 and $1.1 million. The
source for funding the research and development of this
project will come from additional equity and/or debt
financing. No assurance can be given that the Company will
raise the necessary capital to complete this project, or if
completed that it will be accepted in the marketplace.
NorStar has spent approximately $20,000 during the last two
fiscal years on research and development activities.
NorStar employs seven full time employees, five of whom serve
as Officers and Directors of NorStar and two clerical
personnel.
(c) Reports to Security Holders
NorStar is not required to deliver annual reports containing
audited financial statements to shareholders nor is it
required to file reports with the Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of
1934, as amended (the Exchange Act"). Consequently, no
information with respect to the Company is on file with the
Commission or otherwise is a matter of public record.
The public may nevertheless, read and copy any materials that
NorStar files with the SEC at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. The public
may also obtain information on the Company's operation at the
Public Reference Room by calling the SEC at 1-800-SEC-0330.
Upon becoming a reporting company, NorStar will file reports
with the SEC. It also intends to maintain an Internet site
containing annual and quarterly reports, proxy and information
statements.
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion regarding NorStar and its business and
operations contains "forward-looking statements" within the meaning of Private
Securities Litigation Reform Act 1995. Such statements consists of any statement
other than a recitation of historical fact and can be identified by the
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use of forward-looking terminology such as "may," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof of other variations thereon or
comparable terminology. The reader is cautioned that all forward-looking
statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward looking statements. NorStar does not have
a policy of updating or revising forward-looking statements and thus it should
not be assumed that silence by management of NorStar over time means that actual
events are bearing out as estimated in such forward looking statements.
Results of Operations:
Year ended December 31, 1998 as compared to Year Ended December 31,
1997
During the years ending December 31, 1998 and 1997, the Company was in
the process of developing its Internet on-line community. The Company
is continuing such development activities. In addition, the Company
attempted to enter the medical field via its acquisition of JBA Medical
Management, Inc. (JBA Medical") effective January 1, 1998. JBA Medical
operated a medical clinic in Ft. Myers, Florida which uses Metabolic
Medicine and planned to open similar clinics in various other locations
in the State of Florida. However, the Company's board of directors,
prior to December 31, 1998, decided to abandon this endeavor.
Therefore, the Company had no revenues from continuing operations for
the years ended December 31, 1998 and 1997.
During the year ended December 31, 1998, the Company's operating
expenses increased by approximately $109,000 to approximately $441,000
from approximately $332,000 for the year ended December 31, 1997. The
primary cause of the increase was the issuance of 1,222,288 shares of
common stock for professional and other services and employee
compensation as compared to only 100,000 shares of common stock being
issued for such services in the previous year. These shares of common
stock were valued at fair value on the date of issuance and impacted
the Company's operations by non-cash charges of approximately $329,000
and $100,000 for the years ended December 31, 1998 and 1997,
respectively. This increase was offset somewhat by an overall reduction
in fees paid to professionals and consultants in cash during the year
ended December 31, 1998 as compared to the year ended December 31,
1997.
Further, during the year ended December 31, 1998, the Company
recognized a loss from its discontinued medical venture totaling
approximately $549,000 of which approximately $202,000 came from the
operations of the venture and approximately $347,000 resulted from the
Company recognizing a loss on its investment.
As a result of the above, the Company incurred a loss of approximately
$990,000 for the year ended December 31, 1998, of which approximately
$441,000 was from continuing operations as compared to a net loss, all
from continuing operations, of approximately $332,000 for the year
ended December 31, 1997.
Nine months ended September 30, 1999 as compared to the nine months
ended September 30, 1998.
During the nine months ended September 30, 1999 and 1998, the Company
continued developing
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its Internet on-line community. In addition, the Company's board of
directors decided, prior to December 31, 1998 to abandon the Company's
venture into the medical field. Therefore, the Company had no revenues
from continuing operations for the nine months ended September 30, 1999
and 1998.
During the nine months ended September 30, 1999, the Company's
operating expenses increased by approximately $1,761,000 to
approximately $2,144,000 from approximately $383,000 for the nine
months ended September 30, 1998. The primary cause of the increase was
the issuance of 6,701,500 shares of common stock for professional and
other services and employee compensation as compared to only 1,172,288
shares of common stock being issued for such services in the nine
months ended September 30, 1998. These shares of common stock were
valued at fair market value on the date of issuance and impacted the
Company's operations by non-cash charges of approximately $2,079,000
and $275,000 for the nine months ended September 30, 1999 and 1998,
respectively. The balance of the Company's operating expenses were
fairly constant between the two periods.
In addition, the Company recognized a loss from its discontinued
medical venture during the nine months ended September 30, 1998 of
approximately $547,000 of which approximately $200,000 came from the
operation of the venture and approximately $347,000 resulted from the
Company recognizing a loss on its investment.
As a result of the above, the Company incurred a loss of approximately
$2,144,000 for the nine months ended September 30, 1999, all from
continuing operations, as compared to approximately $930,000 for the
nine months ended September 30, 1998, of which approximately $383,000
was from continuing operations.
(a) Liquidity and Capital Resources
As of September 30, 1999, NorStar had working capital of approximately
$230,000.
Except as described in Item 1 (b) (iv), NorStar believes that its
available cash resources, combined with the net proceeds from their
recent Offering, will be sufficient to meet NorStar's presently
anticipated working capital and capital expenditure requirements for at
least the next 12 months. However, NorStar may need to raise
significant additional funds within the next 12 months in order to
support its growth, develop new or enhanced services and products,
respond to competitive pressures, acquire complementary businesses or
technologies or take advantage of unanticipated opportunities.
The Company believes the following trends, events and uncertainties
could have a material impact on their short-term and/or long-term
liquidity. The market for Internet discount services and product
programs is relatively new and is evolving rapidly. NorStar's future
growth is dependent upon its ability to create, develop and distribute
programs that are accepted by its clients as an integral part of their
business model for communicating with their targeted audiences. Demand
and market acceptance of discount products and service programs is
dependent upon a number of factors, including the growth in consumer
access to and acceptance of these programs, the willingness of service
and product providers to offer their services and products to customers
of NorStar at a discount, NorStar's ability to develop and maintain
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distribution channels to sell memberships to consumers. The failure of
providers or consumers to participate in NorStar's programs or
substantial increases in the adequacy or availability of other programs
could have a material and adverse impact on NorStar's business,
operating results and financial condition. In addition, NorStar does
not have long term contracts and needs to establish relationships with
new vendors. As a result, providers of discounted services or products
to NorStar's members may unilaterally reduce the scope of, or terminate
their relationships with NorStar. The termination of NorStar's business
relationship or a material reduction in the availability of services or
products from any of NorStar's significant providers or networks
thereof or NorStar's failure to develop significant new provider
relationships would materially and adversely affect its business,
operating results and financial condition.
During the years ended December 31, 1998 and 1997, the company sold
57,125 and 184,295 shares of common stock and received net proceeds of
approximately $143,000 and $325,000 respectively. During the years
ended December 31, 1998 and 1997, the Company was able to satisfy
certain obligations to professionals, consultants and employees by the
issuance of shares of common stock for services performed. The Company
issued 1,222,288 and 100,000 shares of common stock for such services
having a fair value of approximately $329,000 and $100,000 for the
years ended December 31, 1998 and 1997, respectively.
During the nine months ended September 30, 1999, the Company issued an
additional 6,701,500 shares of common stock having a fair value of
approximately $2,079,000 to professionals, consultants and employees
for services rendered on behalf of the Company. In addition, the
Company sold 4,427,500 shares of Common Stock and received net proceeds
of approximately $550,000 during the nine months ended September 30,
1999.
NorStar believes that within the market niche it seeks to develop, the
following known trends, events or uncertainties that have had or that
are reasonably expected to have a material impact on their net sales or
revenues or income from their continuing operations will include the
following: (i) The market for discounted products and services is
characterized by rapid changes in participating companies, consumers
and service provider requirements and preferences, new service and
product introductions and evolving industry standards that could render
NorStar's existing service practices and methodologies obsolete; (ii)
NorStar's success will depend, in large part, on its ability to improve
its existing services, develop new services and solutions that address
the increasingly sophisticated and varied needs of NorStar's clients,
and respond to technological advances, emerging industry standards and
practices, and competitive service offerings; and (iii) NorStar may not
be successful in responding quickly, cost-effectively and sufficiently
to these developments. If NorStar is unable, for technical, financial
or other reasons, to adapt in a timely manner in response to changing
market conditions or these requirements, its business, results of
operations and financial condition would be materially adversely
affected. There are no significant elements of income or loss that will
arise from NorStar's continuing operations. Likewise, there are no
seasonal aspects to NorStar's business that will have a material effect
on NorStar's financial condition or results of operation.
Year 2000 Plan
I. Introduction
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NorStar is aware of the concerns the Year 2000 presents to
computer systems worldwide. The Company recognizes the worlds
ever increasing reliance on computers and computer technology
to provide services and data to a need-it-now user population.
To that end, NorStar in their analysis of the Y2K issue,
implemented tests on all of their mission critical hardware
and software as well as requiring Y2K disclosure statements
from any vendor they do business with.
NorStar engaged the services of an outside consultant who
conducted the Year 2000 assessment and compliance review for
the Company.
II. Evaluation
Internal and external tests have been performed to ensure that
NorStar's systems will function on January 1, 2000 and beyond.
Because most of NorStar's computer systems have been upgraded
or replaced in the last 4 years, the effect of non-compliant
hardware and software is determined to be minimal.
Year 2000 Compliance Inventory
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Item/Service Manufacturer Method Service Mission Critical
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Connectivity
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Primary Network Primary Network statement ISP Mission Critical
Communications
AOL America On-Line statement ISP Mission Critical
BellSouth.Com BellSouth statement ISP Mission Critical
Phone System ProStar statement Phone Mission Critical
Local Telephone
Service BellSouth statement Phone Mission Critical
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PC Software
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Windows 98SP-1 Microsoft statement Operating System
Word 97 Microsoft statement WP Software
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PC Hardware
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User PC's Various testing Computing Mission Critical
Back-UPS APC statement Power Backup Mission Critical
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Office Electronic Equipment
===========================
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Xerox Fax machine Xerox statement Faxing Mission Critical
Xerox Copy machine Xerox statement Copying Mission Critical
Printers Hewlett statement Printing Mission Critical
Packard
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All of the above listed non-IT systems have been verified in statements by their
respective manufacturer's to be either Year 2000 ready or functionary regardless
of date.
NorStar has completed their testing for Year 2000 for both IT and non-IT
systems. The results necessitate a finding that there are no remaining phases or
testing procedures.
III. Testing
NorStar internal systems have been tested and all mission critical
systems are Y2K compliant. For software, patches were installed for Windows 95,
and 98, to ensure compliance. All other critical software has been confirmed Y2K
ready from the respective vendors.
IV. Action Plan
(a) NorStar will identify and inventory all electronic equipment;
(b) NorStar will assess all identified items for Y2K flaws;
(c) NorStar Mission Critical systems including hardware and software
will be tested and evaluated;
(d) NorStar will develop and implement a strategy to test, repair or
replace all affected systems;
(e) Y2K compliance documentation will be created by NorStar; and
(f) NorStar will implement contingency plans to protect the business
As details regarding preparedness become available for both internal
and external systems, the Company will determine where potential problems might
exist. A list of potential alternatives will be compiled that provide similar
services.
V. Conclusion
Based on the information provided from NorStar internal and external
research NorStar is confident
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that it is adequately prepared to handle the Y2K problem on January 1, 2000 and
beyond.
Item 3. Description of Property
NorStar's place of business is located at 6365 N.W. 6th Way,
Fort Lauderdale, Florida 33309. The premises is described as a CBS and steel
class A building/shared executive suite. NorStar subleases approximately 900
square feet on a month to month tenancy from American Network Realty.
Item 102 (a) 1. Small Business Issuer engaged in significant mining
operations:
NorStar acquired 680 acres (17 gold mining claims) in Nevada and is
seeking a joint venture partner to work the claims.*
Description of Property pursuant to Guide 7, section 229.801(g) and section
229.802(g)
The seventeen (17) lode claims are located in the Gold Mountain Mining
District of Esmeralda County, Nevada. Esmeralda County is noted only for its
mining industry. The mines located on the edge of Goldfield, Nevada have
continued to operate on a limited basis until the end of March 1992 when the
Black Hawk mine closed its underground operations. There continues to be several
leach operations in full swing.
Claim Location
The seventeen (17) un-patented claims are located 180 miles north of
Las Vegas, Nevada on state Highway 95 to Lida Junction, the south to Gold Point
then south by southeast approximately 8 miles. The claims are situated in
Township 8S, Range 41, Sections 11, 14, and 22. The Eastern Group (7 claims) is
located at the elevation of 6,500 to 7,000 feet and is the most mountainous
area. The Western Group (10 claims) is located on a gentle rolling terrain for
the most part. In either case walking is the only way to gain access to the
greatest portion of the claims.
Geology
The rock is primarily Tertiary age quartz monzonite. There are several
visible fault zones and you find that they contain quartz veins and stringers.
Mineralization is easily located on most of the claims and there appear to be
several areas that should be excellent prospects for geologic exploration. There
exists on the claims one (1) 250 foot adit with mineralization showing and four
(4) shafts. The deepest shaft is located on the Western Group of claims and has
been plumbed to 185 feet. Some of the underground workings have been mapped
prior to it filling with water.
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Climate
The climate is arid, dry and hot in summertime and windy and cold
November through January. However, snowfall is limited and in most cases would
not interfere with mining operations.
Ore Dumps
There is a 2500 ton dump located near the main shaft. Sampling of this
dump shows that the ore lends itself to the leaching process for recovery of
gold and silver. The gold in this area runs .997 fine. There are also several
other smaller ore dumps scattered among the claims. Since ore is not complex it
can be easily extracted by the leaching method or can be transported to a mill
for crushing and processing.
Conclusions
Over the years estimates of ore reserves have been made by several
geologists and mining engineers. Donald R. McGregor stated in his report that by
just stripping the mountain on which the main shaft is located would open up
approximately three and one-half million (3,500,000) tons of ore with an average
grade of .116 ounces gold per ton and .23 ounces of silver per ton. The gross
value of this area alone calculates out to over $146,000,000. Using $350.00/oz.
gold and $5.00/oz silver.
This does not take into account the eastern group of claims. The assays
from this area range from .43 ounces gold and 2.26 ounces silver per ton to .83
ounces gold and 14.06 ounces silver per ton. An extensive core drilling program
in this area could easily produce triple the values calculated for the western
group of claims.
The recovery cost for strip mining and heap leach is about $180 per
ounce. Custom milling would run approximately $220 per ounce. A mining operation
is deemed feasible particularly since the ore is not complex.
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*The aforementioned investments in gold mining are for investment
purposes only and should not be construed as the core business or core business
activity of NorStar.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
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Title of Name and address Amount and nature Percentage of
class of beneficial owners of beneficial ownership class
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<S> <C> <C> <C>
Common Stock Balallan Limited[1] 2,992,000 shares 19.3%
50 Broadway, Suite 2300
New York, N.Y. 10004
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Common Stock Delta Capital, LLC[1] 1,408,000 shares 9.0%
1001 Cambridge Square # C
Alpharetta, GA 30004
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[1] The listed beneficial owners have no right to acquire any shares within
60 days of the date of this Form 10-SB from options, warrants, rights,
conversion privileges or similar obligations.
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(b) Security Ownership of Management
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Title of Name and address Amount and nature Percentage of
class of beneficial owners of beneficial ownership class
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Common Stock Harry F. DiFrancesco[1] 1,500,000 shares 9.7%
6365 N.W. 6th Way, Suite 160
Fort Lauderdale, Fl 33309
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Common Stock Andrew Peck[1] 200,000 1.29%
6365 N.W. 6th Way, Suite 160
Fort Lauderdale, Fl 33309
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Common Stock Jay Sanet[1] 125,000 .8%
6365 N.W. 6th Way, Suite 160
Fort Lauderdale, Fl 33309
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Common Stock Maynard Neil Aboguv[1] 50,000 .3%
6365 N.W. 6th Way, Suite 160
Fort Lauderdale, Fl 33309
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Common Stock Jerry Saver[1] 25,000 .2%
6365 N.W. 6th Way, Suite 160
Fort Lauderdale, Fl 33309
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[1] The listed beneficial owners have no right to acquire any shares
within 60 days of the date of thus Form 10-SB from options, warrants,
rights, conversion privileges or similar obligations.
(c) Change in Control
There are no arrangements, including any pledge by any person of
securities of NorStar or any of its parents, the operation of which may at a
subsequent date result in a change in control of the registrant.
Item 5. Directors, Executive Officers, Promoters and Control Persons
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<CAPTION>
Name Age Title Directorship Five Years Business Experience
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Harry F. DiFrancesco 73 President Chairman of Bd* In 1965 Mr. DiFrancesco was Chairman, CEO and
President of DiFrancesco Construction Company.
From 1970 to 1975, Mr. DiFrancesco established and
operated a shoe manufacturing company in Brazil.
From 1979 to 1988, Mr. DiFrancesco was Chairman
of the Board of International Jewelry Manufacturing
Corp. an importer and wholesaler of diamonds. Mr.
DiFrancesco has more than 40 years of business
experience in real estate development, importing and
jewelry manufacturing and sales
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew S. Peck 54 V.P. of Finance Dir. & Secretary* Since 1990, Mr. Peck has served as President and
Senior Financial Specialist for Financial Support
Services, Inc. Mr. Peck has more than 20 years of
experience in corporate finance, planning, project
analysis and systems development.
- ------------------------------------------------------------------------------------------------------------------------------------
Maynard Neil Aboguv 55 VP of Sales Mgmt Director* Mr. Aboguv has over 15 years of experience as a sales
representative and manager for various companies
representing several industries.
- ------------------------------------------------------------------------------------------------------------------------------------
Jerry R. Saver 52 V.P. of Sales Director* Mr. Saver has over 20 years of extensive sales and
marketing experience.
</TABLE>
14
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jay Sanet 49 V.P. Corp Dev. Director* Mr. Sanet has served as a Director since December,
1998. From 1996 to 1998, Mr. Sanet was a branch
manager for First National Equity Group. In 1995 Mr.
Sanet was a branch manager for Vision Investment
Group. From 1994 to to 1995 Mr. Sanet was a
registered representative for Myers, Pollack & Robin.
He actively assists the Company in identifying and
exploring merger candidates.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Each Director shall hold office until the next annual meeting of
stockholders and until his successor shall have been elected and qualified.
The directors of NorStar hold no other directorship in any other
reporting company. NorStar does not have anyone that it would classify as a
significant employee. There are no family relationships among the directors,
executive officers or persons nominated or chosen by the Company to become
directors or executive officers.
(A) Involvement in Certain Legal Proceedings: None
Item 6. Executive Compensation
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Fiscal Year Name of Capacity in Salaries, Fees Bonuses Deferred
- ----------- ------- ----------- -------------- ------- --------
Individual which served & Commissions Compensation
---------- ------------ ------------- ------------
<S> <C> <C> <C>
1999 Harry DiFrancesco* Pres. & Dir $0.00
Jay Sanet* V.P. & Dir. $0.00
Andrew S. Peck* Sect, Treas. & Dir $0.00
Jerry R. Saver* V.P. Asst Sect & Dir $0.00
Maynard N. Abguv* V.P. & Dir. $0.00
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Company has paid no compensation to any of its named executive
officers and directors. In lieu of compensation the officers and directors
received shares of NorStar Common Stock
Item 7. Certain Relationships and Related Transactions
(a) Transactions With Management and Others: None
(b) Certain Business Relationships: None
15
<PAGE>
Part II
<TABLE>
<CAPTION>
Item 8. Legal Proceedings
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Court Date Proceeding Principal Parties Description of Facts Relief Sought
- ------------- --------------- ----------------- -------------------- -------------
Began Or Action Taken
----- ---------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Circuit Court in 03/19/98 Knight & Reich v. This is a lawsuit pertaining Joint Stipulation of
and for the 12th Judicial MTC, JBA and NorStar to medical records Dismissal agreed to
Circuit in and for Lee
County Florida
- ------------------------------------------------------------------------------------------------------------------------------------
Circuit Court in 03/20/98 NorStar, et al. v. Agolli Lawsuit for injunctive relief Injunctive Relief
and for the 12th Judicial Ginoli, Reich and Knight counterclaim filed for unpaid Joint agreement
Circuit in and for Lee wages and benefits Stipulation to Dismiss
County Florida Action and
Counterclaim
- ------------------------------------------------------------------------------------------------------------------------------------
Circuit Court in 06/24/98 JBA and NorStar v. Lawsuit seeking to enforce Agreed to Joint
and for the 12th Judicial Ginoli and Agolli non-compete agreement Stipulation to
Circuit in and for Lee Dismissal of action
County Florida
- ------------------------------------------------------------------------------------------------------------------------------------
Circuit Court in 03/31/98 Agolli, Ginoli et al. v. Action for unpaid wages Stipulation of
and for the 12th Judicial NorStar, JBA et. al. and benefits. Counterclaim Dismissal agreed
Circuit in and for Lee for breach of contract, breach to between all
County Florida of fiduciary duty, and for civil Parties
theft
</TABLE>
Item 9. Market for Common Equity and Related Stockholder matters
NorStar's common stock is currently traded on the Over-The-Counter
Electronic Bulletin Board("OTCBB"). The Company is presently not required to
file reports with the SEC pursuant to the Exchange Act. However, under the new
OTC Eligibility Rule, effective January 4, 1999, companies whose securities are
quoted on the OTCBB will be required to file periodic reports with the SEC to
continue quoting their securities (the "Eligibility Rule"). In order to comply
with the Eligibility Rule, most companies will register their securities under
the Exchange Act on Form 10 or (Form 10-SB if a small business issuer, as is the
case for NorStar). The Eligibility Rule currently provides that an issuer reach
"no comment" status prior to its scheduled phase-in date in order to avoid being
delisted. NorStar's scheduled phase-in date is February 2000. No assurance can
be given that the application made will be approved in time to maintain its
registration on the OTCBB which could adversely effect the trading volume as
well as the price of its common shares.
The high and low bid sales prices for the equity for each full
quarterly period within the two most recent fiscal years and any subsequent
interim period for which financial statements are included are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Year Quarter High Bid Low Bid Year Quarter High Bid Low Bid
- ---- ------- -------- ------- ---- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1st 15/16 1/4 1999 1st 15/16 1/4
1998 2nd 5/16 3/16 1999 2nd 13/16 0.20
1998 3rd 1 3/16 3/16 1999 3rd 13/16 0.20
1998 4th 3/8 1/8 1999 4th 7/16 0.24
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
(b) The approximate number of shareholders of record of NorStar Common
Stock is 232. NorStar has not paid dividends on its capital stock and does not
anticipate that it will do so in the foreseeable future. NorStar intends to
retain any future earnings for reinvestment in its business. Payments of
dividends in the future will depend upon NorStar's growth, profitability,
financial condition and other factors that NorStar's Board of Directors may deem
relevant.
Item 10. Recent Sales of Unregistered Securities
In May, 1999, NorStar sold 4,400,000 shares of its Common Stock, $.001
par value at $.125 per share. This offering was made pursuant to Rule 504 of
Regulation D as promulgated under the Securities Act of 1933 as amended
effective April 7, 1999. These securities were issued as follows: 2,992,000 to
Balallan Limited and 1,408,000 to Delta Capital.
(e) Not Applicable
(f) The proceeds to NorStar from the sale of the Common Stock offering,
were approximately $550,000. Approximately $80,000 of the net proceeds of this
offering are to be utilized to comply with the OTC Eligibility Rule,
approximately $250,000 for web site development, $100,000 for software
development, and $120,000 for working capital and general corporate purposes.
The foregoing represents NorStar best estimate of its allocation of the net
proceeds of this offering based upon the current state of its business
operations, its current plans, and current economic and industry conditions and
is subject to a reapportionment of proceeds among the categories listed above or
to new categories. Until used, NorStar intends to invest the net proceeds from
this offering in short-term interest bearing, investment grade securities,
certificates of deposit or guaranteed obligations of the United States of
America.
Item 11. Description of Securities
The authorized capital stock of NorStar consists of 150,000,000 shares
of Common Stock, par value $0.01 of which 15,493,825 shares are issued and
outstanding on the date hereof. All outstanding shares of Common Stock are fully
paid and non-assessable.
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders of NorStar. In addition, such
holders are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available. In the event of the dissolution, liquidation or winding-up of
NorStar, the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of all of the liabilities of NorStar. Shareholders are
not entitled to accumulate their votes in any election. Holders of Common Stock
have no preemptive rights or other rights to subscribe or convert shares of
Common Stock into other securities.
The Company has authorized 1,000,000 shares each of Class A convertible
preferred securities and Class B preferred securities. No shares of either class
have been issued and no shares of either class are reserved for any purpose. The
holders of Class A convertible preferred
17
<PAGE>
stock shall be entitled to receive in each year out of the surplus net profits
of the corporation a fixed yearly dividend of Ten percent (10%), payable as may
be authorized by the directors, before any dividend is set apart or paid on the
common stock. The dividends upon the Class A stock are cumulative. The Class A
preferred stock is non-voting. Each holder of record of Class A convertible
preferred stock may at any time or from time to time, in such holder's sole
discretion and at such holder's option, convert any whole number of such
holder's Class A preferred stock into fully paid and nonassessable Common Stock
at the conversion ratio of Five (5) shares of Common Stock for each One (1)
share of Class A preferred stock.
In the event of any liquidation or dissolution or winding up, whether
voluntary or involuntary, the holders of Class A preferred stock shall be
entitled to be paid in full both the par amount of their shares and the unpaid
dividend accrued, before any amount shall be paid to the holders of other stock.
The Company has authorized 1,000,000 shares of Class B preferred stock.
The holders of Class B preferred stock shall be entitled to receive in each year
out of the surplus net profits of the corporation a fixed yearly dividend of Ten
Percent (10%) payable as may be authorized by the Directors, before any dividend
shall be set apart or paid on the common stock. The dividends on the Class B
preferred stock are cumulative. The Class B preferred stock is non-voting stock.
In the event of any liquidation dissolution or winding up, whether
voluntary or involuntary, the holders of Class B preferred stock shall be
entitled to be paid in full both the par amount of their shares and the unpaid
dividends accrued, before any amount shall be paid to the holders of the Common
Stock.
In the event of any liquidation or dissolution or winding up, whether
voluntary or involuntary, after the payment to the holders of Common Stock of
its par value the remaining assets and funds shall be divided pro rata among the
holders of all classes of capital stock.
Item 12. Indemnification of Directors and Officers
The official Code of Utah annotated authorizes NorStar to indemnify
its directors, offices and agents in certain circumstances. Utah law provides
that indemnification will be disallowed in any proceeding in which the director
is adjudged liable to NorStar: (i) for any appropriation, in violation of the
director's duties, of any business opportunity of NorStar, (ii) for acts or
omissions which involve intentional misconduct or a knowing violation of law,
(iii) for the types of liability under Code, or (iv) for any transaction from
which the director derived an improper personal benefit.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, management of NorStar has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
18
<PAGE>
Part F/S
Item 13. Financial Statements
See attached unaudited condensed, consolidated financial statements of
NorStar and related financial notes which are included in this registration
statement.
Item 14. Changes In and Disagreement with Accountants on Accounting and
Financial Disclosure
Not Applicable
19
<PAGE>
NorStar Group, Inc. and Subsidiaries
Index to Financial Statements
-----------------------------
PAGE
----
Report of Independent Public Accountants F-2
Consolidated Balance Sheets
December 31, 1998 and September 30, 1999 (Unaudited) F-3
Consolidated Statements of Operations
Years Ended December 31, 1998 and 1997 and Nine Months
Ended September 30, 1999 and 1998 (Unaudited) F-4
Consolidated Statements of Stockholders' Equity (Deficiency)
Years Ended December 1998 and 1997 and Nine Months Ended
September 30, 1999 (Unaudited) F-5
Consolidated Statements of Cash Flows
Years Ended December 31, 1998 and 1997 and Nine Months
Ended September 30, 1999 and 1998 (Unaudited) F-6
Notes to Consolidated Financial Statements F-7/12
* * *
F-1
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To the Board of Directors and Stockholders
NorStar Group, Inc.
We have audited the accompanying consolidated balance sheet of NorStar Group,
Inc. and Subsidiaries as of December 31, 1998, and the related consolidated
statements of operations, stockholders' equity (deficiency) and cash flows for
the years ended December 31, 1998 and 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NorStar Group, Inc.
and Subsidiaries as of December 31, 1998, and their results of operations and
cash flows for the years ended December 31, 1998 and 1997, in conformity with
generally accepted accounting principles.
J.H. Cohn LLP
Roseland, New Jersey
October 6, 1999
F-2
<PAGE>
NorStar Group, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 1998 and September 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Assets 1998 1999
------ ----------- ----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 422,524
Prepaid expenses
----------
Total current assets 422,524
Capitalized software development costs 28,823
Mineral rights, at estimated net realizable value $ - -
------------ -----------
Totals $ - $ 451,347
============ ===========
Liabilities and Stockholders' Equity (Deficiency)
Current liabilities:
Accrued expenses $ 959
Noninterest bearing demand notes payable to
stockholders 225,915 $ 192,843
Consulting fees payable 140,000
------------ -----------
Total liabilities 366,874 192,843
------------ -----------
Commitments
Stockholders' equity (deficiency):
Class A convertible preferred stock, par value $10 per
share; 1,000,000 shares authorized; none issued - -
Class B preferred stock, par value $10 per share;
1,000,000 shares authorized; none issued - -
Common stock, par value $.01 per share; 150,000,000
shares authorized; 4,164,825 and 15,493,825 shares
issued and outstanding 41,648 154,938
Additional paid-in capital 2,751,655 5,407,590
Accumulated deficit (3,160,177) (5,304,024)
----------- -----------
Total stockholders' equity (deficiency) (366,874) 258,504
----------- -----------
Totals $ - $ 451,347
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
NorStar Group, Inc. and Subsidiaries
Consolidated Statements of Operations
Years Ended December 31, 1998 and 1997 and
Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
December 31, September 30,
------------ -------------
1998 1997 1999 1998
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
---------- ---------- ----------- ----------
Operating expenses:
Selling 79,080 83,194 11,944 69,153
General and administrative 361,780 248,587 2,131,903 313,985
---------- ---------- ----------- ---------
Totals 440,860 331,781 2,143,847 383,138
---------- ---------- ----------- ---------
Loss from continuing operations (440,860) (331,781) (2,143,847) (383,138)
---------- ---------- ----------- ---------
Discontinued medical operations:
Loss from operations (201,617) (199,931)
Loss on disposal (347,500) (347,500)
---------- ----------
Loss from discontinued operations (549,117) (547,431)
---------- ---------
Net loss $(989,977) $(331,781) $(2,143,847) $(930,569)
========= ========= =========== =========
Basic net loss per common share:
Loss from continuing operations $(.13) $(.14) $(.22) $(.12)
Loss from discontinued operations (.16) (.18)
----- ----- ----- -----
Net loss $(.29) $(.14) $(.22) $(.30)
===== ===== ===== =====
Basic weighted average common
shares outstanding 3,378,168 2,384,017 9,659,329 3,119,981
========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
NorStar Group, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficiency)
Years Ended December 31, 1998 and 1997 and Nine Months Ended
September 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
Number of Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit Total
------ ------ ------- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 2,301,117 $ 23,011 $1,626,210 $(1,838,419) $ (189,198)
Shares issued for:
Purchase of business 300,000 3,000 244,500 247,500
Services 100,000 1,000 99,000 100,000
Proceeds from sale of shares 150,295 1,503 323,497 325,000
Subscription to purchase 34,000
shares 340 84,660 $(85,000)
Net loss (331,781) (331,781)
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1997 2,851,412 28,854 2,377,867 (85,000) (2,170,200) 151,521
Issuance of shares upon receipt
of proceeds from subscription
receivable 34,000 85,000 85,000
Shares issued for professional
and other services and em-
ployee compensation 1,222,288 12,223 316,334 328,557
Proceeds from sale of shares 57,125 571 57,454 58,025
Net loss (989,977) (989,977)
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1998 4,164,825 41,648 2,751,655 - (3,160,177) (366,874)
Issuance of shares for payment
of consulting fees payable 200,000 2,000 138,000 140,000
Shares issued for professional
and other services and
employee compensation 6,701,500 67,015 2,012,210 2,079,225
Proceeds from sale of shares 4,427,500 44,275 505,725 550,000
Net loss (2,143,847) (2,143,847)
--------- --------- --------- --------- --------- ---------
Balance, September 30, 1999 15,493,825 $154,938 $5,407,590 $ - $(5,304,024) $ 258,504
========== ========= ========= ========= =========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
NorStar Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 1998 and 1997 and
Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
December 31, September 30,
----------------------------- --------------------------------
1998 1997 1999 1998
------------- ------------ ------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Operating activities:
Net loss $(989,977) $(331,781) $(2,143,847) $(930,569)
Adjustments to reconcile net loss to
net cash used in operating activities:
Services, compensation and other
expenses paid through the
issuance of common stock 328,557 100,000 2,079,225 275,368
Write-off of goodwill attributable to
discontinued operations 347,500 347,500
Changes in operating assets and lia-
bilities - accrued expenses 959 (328) (959) 738
------------- ------------ ------------- -------------
Net cash used in operating
activities (312,961) (232,109) (65,581) (306,963)
------------- ------------ ------------- -------------
Investing activities:
Cash paid in connection with purchase
of business (100,000)
Software development costs capitalized (28,823)
------------ -------------
Net cash used in investing
activities (100,000) (28,823)
------------ -------------
Financing activities:
Net proceeds from issuance of common
stock, including proceeds from pay-
ments of subscriptions receivable 143,025 325,000 550,000 140,000
Proceeds from issuance of notes pay-
able to stockholders 161,495 15,550 (33,072) 158,522
------------- ------------ ------------- -------------
Net cash provided by financing
activities 304,520 340,550 516,928 298,522
------------- ------------ ------------- -------------
Net increase (decrease) in cash (8,441) 8,441 422,524 (8,441)
Cash, beginning of period 8,441 - - 8,441
------------- ------------ ------------- -------------
Cash, end of period $ - $ 8,441 $ 422,524 $ -
============= ============ ============= =============
Supplemental disclosure of cash flow information:
Income taxes paid $ - $ - $ - $ -
============= ============ ============= =============
Interest paid $ - $ - $ - $ -
============= ============ ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
NorStar Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1999 and 1998 is Unaudited)
Note 1 - Business:
NorStar Group, Inc. ("NorStar") was originally incorporated in the
State of Utah during March 1961 as Florist Accounting Services, Inc.
(the name Florist Accounting Services, Inc. was changed to Luxor
Group N.S. Inc. during 1971 and to NorStar Group, Inc. during 1992).
As used herein, the "Company" refers to NorStar or NorStar together
with VeeAreCity.com, Inc. ("VeeAreCity"), its only subsidiary as of
September 30, 1999, and/or certain other subsidiaries that have been
acquired and disposed of by NorStar.
The Company was originally organized as a finance company that was
primarily engaged in factoring accounts receivable for florists in
Utah. However, the Company was unable to develop profitable financing
operations, and it became substantially inactive until April 1992.
During the period from April 1992 through September 30, 1999, the
Company acquired and/or began to develop, and disposed of, several
businesses and certain other investments. As of September 30, 1999,
the Company, was attempting to develop an Internet business through
VeeAreCity and was holding an investment in mineral rights, as
further described below. During the years ended December 31, 1998 and
1997, the Company bought and abandoned a medical business (see Note
3).
In 1998, the Company began the development of its Internet business
which involves the creation of a portal to a cyber-city, online
community of "One Stop Shopping" for products, entertainment,
education and business services. The portal is intended to provide
the subscriber/member with access to several web browsers, a
directory of thousands of stores, three dimensional virtual reality
("VR") chat rooms, forums and game rooms, a VR dating service, VR
business conference rooms, specialty advertising rooms with VR
activities and global e-mail services that can be accessed through
the web anywhere in the world. The Company intends to generate
revenues from this business primarily through the sale of annual
memberships to consumers who will be offered discounts on products
and services through a provider network to be developed by the
Company.
As of September 30, 1999, the Company also held the mineral rights
attributable to 17 claims that were acquired on April 29, 1992 for
gold mines located in the Gold Mountain mining district of Esmeralda
County, Nevada (see Note 4). However, management does not expect
mining operations to become one of the Company's core businesses.
Management is attempting to find a joint venture partner to assist
the Company in developing these claims. If a joint venture partner
cannot be found, management expects that the Company will continue to
hold the claims as an investment.
F-7
<PAGE>
NorStar Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1999 and 1998 is Unaudited)
Note 2 - Summary of significant accounting policies:
Principles of consolidation:
The accompanying consolidated financial statements include the
accounts of NorStar and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ
from those estimates.
Software development costs:
Pursuant to Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased
or Otherwise Marketed," the Company is required to charge the
costs of creating a computer software product to research and
development expense as incurred until the technological
feasibility of the product has been established; thereafter, all
related software development and production costs are required to
be capitalized.
Commencing upon the initial release of a product, capitalized
software development costs and any costs of related purchased
software are generally required to be amortized over the estimated
economic life of the product based on current and estimated future
revenues. Thereafter, capitalized software development costs and
costs of purchased software are reported at the lower of
unamortized cost or estimated net realizable value. Due to the
inherent technological changes in the software development
industry, estimated net realizable values or economic lives may
decline and, accordingly, the amortization period may have to be
accelerated.
Charges to research and development expenses for software
development costs incurred prior to the establishment of
technological feasibility were not material in the nine months
ended September 30, 1999 and the years ended December 31, 1998 and
1997.
Impairment of long-lived assets:
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121"). Under SFAS 121, impairment losses on long-lived
assets, such as goodwill and capitalized software costs, are
recognized when events or changes in circumstances indicate that
the undiscounted cash flows estimated to be generated by such
assets are less than their carrying value and, accordingly, all or
a portion of such carrying value may not be recoverable.
Impairment losses are then measured by comparing the fair value of
assets to their carrying amounts.
F-8
<PAGE>
NorStar Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1999 and 1998 is Unaudited)
Note 2 - Summary of significant accounting policies (continued):
Advertising:
The Company expenses the cost of advertising and promotions as
incurred. Advertising costs, which are included in selling
expenses and charged to operations, were immaterial for the nine
months ended September 30,1999 and the years ended December 31,
1998 and 1997, respectively.
Income taxes:
The Company accounts for income taxes pursuant to the asset and
liability method which requires deferred income tax assets and
liabilities to be computed annually for temporary differences
between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.
The income tax provision or credit is the tax payable or
refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.
Net earnings (loss) per share:
The Company presents "basic" earnings (loss) per share and, if
applicable, "diluted" earnings per share pursuant to the
provisions of Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS 128"). Basic earnings (loss) per share
is calculated by dividing net income or loss by the weighted
average number of shares outstanding during each period. The
calculation of diluted earnings per share is similar to that of
basic earnings per share, except that the denominator is increased
to include the number of additional common shares that would have
been outstanding if all potentially dilutive common shares, such
as those issuable upon the exercise of stock options, were issued
during the period. The Company did not have any potentially
dilutive common shares outstanding during the nine months ended
September 30, 1999 and the years ended December 31, 1998 and 1997.
All reference as to numbers of shares of common stock have been
retroactively adjusted as appropriate for a 1-for-5 reverse split
approved by the board of directors and the stockholders of the
Company on April 1, 1998.
Recent accounting pronouncements:
The Financial Accounting Standards Board and the Accounting
Standards Executive Committee of the American Institute of
Certified Public Accountants had issued certain accounting
pronouncements as of December 31, 1998 and September 30, 1999 that
will become effective in subsequent periods; however, management
of the Company does not believe that any of those pronouncements
would have significantly affected the Company's financial
accounting measurements or disclosures had they been in effect as
of December 31, 1998 and/or September 30, 1999.
F-9
<PAGE>
NorStar Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1999 and 1998 is Unaudited)
Note 2 - Summary of significant accounting policies (concluded):
Unaudited interim financial statements.
In the opinion of management, the accompanying unaudited
consolidated financial statements reflect all adjustments,
consisting of normal recurring accruals, necessary to present
fairly the financial position of the Company as of September 30,
1999, its results of operations and cash flows for the nine months
ended September 30, 1999 and 1998 and its changes in stockholders'
equity (deficiency) for the nine months ended September 30, 1999.
Pursuant to rules and regulations of the Securities and Exchange
Commission, certain information and disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted from
the unaudited consolidated financial statements unless significant
changes have taken place since the end of the most recent fiscal
year.
The results of operations for the nine months ended September 30,
1999 are not necessarily indicative of the results of operations
for the full year ending December 31, 1999.
Note 3 - Purchase and disposal of medical operations:
On December 10, 1997, the Company consummated the acquisition of 100%
of the issued and outstanding shares of common stock of JBA Medical
Management, Inc. ("JBA Medical") for total consideration of $347,500
comprised of $100,000 which was paid in cash and the issuance of
300,000 shares of the Company's common stock with an estimated fair
value of $247,500. The issuance of the shares was a noncash
transaction that is not reflected in the accompanying consolidated
statement of cash flows for the year ended December 31, 1997.
JBA Medical was the operator of a medical clinic in Ft. Meyers,
Florida and had planned to open additional clinics in various other
locations in Florida. The Company was required to account for the
acquisition of JBA Medical pursuant to the purchase method of
accounting. Pursuant to a plan adopted by its board of directors, the
Company discontinued and abandoned its medical operations in the
first quarter of 1998. Accordingly, the results of the Company's
medical operations have been included in the accompanying
consolidated statements of operations for the period from the date of
acquisition until the operations were abandoned and comprise its loss
from discontinued operations for the year ended December 31, 1998.
As of the date of acquisition, JBA Medical did not have any material
tangible or intangible assets or liabilities. Accordingly, the cost
of the acquisition of $347,500 was allocated to goodwill. The loss on
disposal of discontinued operations in 1998 is attributable to the
write-off of the goodwill as a result of the abandonment of the
medical operations. Revenues from discontinued medical operations
totaled approximately $182,000 in 1998.
F-10
<PAGE>
NorStar Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1999 and 1998 is Unaudited)
Note 3 - Purchase and disposal of medical operations (concluded):
Unaudited pro forma information showing the Company's results of
operations for the years ended December 31, 1998 and 1997 assuming
the acquisition of JBA Medical had been consummated at the beginning
of each year has not been presented since such assumption would not
have a material effect on the results of the Company's continuing
operations.
Note 4 - Investment in mineral rights:
The Company acquired the mineral rights attributable to its gold
mining claims (see Note 1) on April 29, 1992 for shares of common
stock with a fair value of $400,000. The Company also entered into an
agreement whereby it became obligated to pay total fees of $200,000
to the former owner for consulting services that were to be provided
over the five year period subsequent to the acquisition. As explained
in Note 1, management has been attempting to find a joint venture
partner to assist the Company in developing these claims.
Although management is still attempting to find a joint venture
partner, it determined that the investment in the mineral rights had
been impaired based on the inability to find a joint venture partner
and the uncertainties related to the Company's ability to generate
profitable mining operations and, as a result, the Company wrote off
the carrying value of the investment and the unamortized cost
attributable to the consulting fees in 1996.
During the nine months ended September 30, 1999, the Company paid the
remaining carrying value of its obligation under the consulting
agreement of $140,000 by issuing 200,000 shares of common stock to
the former owner of the mineral rights with an approximate fair value
of $140,000. The issuance of the shares was a noncash transaction
that is not reflected in the accompanying consolidated statement of
cash flows for the nine months ended September 30, 1999.
Note 5 - Income taxes:
As of September 30, 1999, the Company had net operating loss
carryforwards of approximately $5,304,000 available to reduce future
Federal taxable income which will expire at various dates through
2019. The Company had no other material temporary differences as of
that date. Due to the uncertainties related to, among other things,
the changes in the ownership of the Company, which could subject
those loss carryforwards to substantial annual limitations, and the
extent and timing of its future taxable income, the Company offset
the deferred tax assets attributable to the potential benefits of
approximately $2,122,000 from the utilization of those net operating
loss carryforwards by an equivalent valuation allowance as of
September 30, 1999.
F-11
<PAGE>
NorStar Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1999 and 1998 is Unaudited)
Note 5 - Income taxes (concluded):
The Company had also offset the potential benefits from net operating
loss carryforwards of approximately $1,264,000, $868,000 and $735,000
by equivalent valuation allowances as of December 31, 1998, 1997 and
1996, respectively, and $1,240,000 as of September 30, 1998. As a
result of the increases in the valuation allowance of $396,000 and
$133,000 during the years ended December 31, 1998 and 1997,
respectively, and $858,000 and $372,000 during the nine months ended
September 30, 1999 and 1998, respectively, no credits for income
taxes are included in the accompanying consolidated statements of
operations.
Note 6 - Concentrations of credit risk:
Financial instruments which subject the Company to concentrations of
credit risk consist primarily of cash. The Company maintains cash in
bank deposit and other accounts the balances of which, at times, may
exceed Federally insured limits. At September 30, 1999, such cash
balances exceeded Federally insured limits by $322,524. Exposure to
credit risk is reduced by placing such deposits in major financial
institutions that have high credit ratings.
Note 7 - Fair value of financial statements:
The Company's material financial instruments at September 30, 1999
for which disclosure of estimated fair value is required by certain
accounting standards consisted of cash and notes payable to
stockholders. In the opinion of management, cash was carried at fair
value because of its liquidity. Because of the relationship of the
Company and its stockholders, there is no practical method that can
be used to determine the fair value of the notes payable to
stockholders.
Note 8 - Preferred stock:
The Company's Articles of Incorporation authorize the issuance of up
to 1,000,000 shares of Class A preferred stock and 1,000,000 shares
of Class B preferred stock. No shares of preferred stock had been
issued as of September 30, 1999. Each share of Class A and Class B
preferred stock is nonvoting; is entitled to an annual dividend, as
may be declared by the Company's board of directors, of 10% that is
cumulative; has a par value of $10 per share; and has a preference in
liquidation equal to its par value plus all declared but unpaid
dividends. Each share of Class A preferred stock is convertible at
any time into five shares of the Company's common stock.
* * *
F-12
<PAGE>
Part III
Item 15. Financial Statements And Exhibits
20
<PAGE>
Other Exhibits
Exhibits
3.1 Articles of Incorporation as filed with the Utah Secretary of State
3.1(i) By-laws
3.1(ii) Specimen Stock Certificate
4(a) Certificate of Existence and Good Standing Status
4(b) Certificate to do business as a Foreign Corporation in the State of
Florida
10. Material Contract
27. Financial Data Work Sheet
21
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
NorStar Group, Inc.
-------------------
(Registrant)
Date: December 7, 1999
--------------------------
By: /s/ Harry DiFrancesco
----------------------------
Harry DiFrancesco
President & Chairman of the Board
22
<PAGE>
Exhibit 3.1
[STAMP OMITTED]
[SEAL OMITTED]
ARTICLES OF AMENDMENT
THE ARTICLES OF
INCORPORATION
OF
NORSTAR GROUP, INC.
To: State of Utah, Department of Commerce
Division of Corporations & Commercial Code
Pursuant to the requirements of Section 16-10a-1006 of the Utah Revised Business
Corporation Act, Norstar Group, Inc., a Utah corporation, for the purpose of
amending its Articles of Incorporation, hereby sets forth as follows:
(1) The name of the corporation is: NORSTAR GROUP, INC.
(2) Article VI of the Articles of Incorporation is repealed in its
entirety and a new Article VI is adopted as follows:
"ARTICLE VI"
The Aggregate number of common shares which the corporation shall have the
authority to issue is ONE HUNDRED FIFTY MILLION (150,000,000) at the par value
of $.01 each. In addition, the corporation shall have the authority to issue
preferred stock in the amounts and dividend into classes, as follows:
1. Class A convertible preferred stock consisting of ONE
MILLION (1,000,000) shares of the par value of Ten Dollars ($10)
each;
2. Class B preferred stock consisting of ONE MILLION
(1,000,000) shares of the par value of Ten Dollars ($10) each.
The holders of Class A convertible preferred stock shall be entitled to receive
in each year out of the surplus net profits of the corporation a fixed yearly
dividend of Ten Percent (10%) payable as may be authorized by the directors,
before any dividend shall be set apart or paid on the common stock. The
dividends upon the Class A stock shall cumulative. The stock shall be NON-VOTING
stock.
Each holder of record of Class A convertible preferred stock may at any time or
from time to time, in such holder's sole discretion and at such holder's option,
convert any whole number of such holder's Class A stock into fully paid and
nonassessable Common Stock at the conversion ratio of FIVE (5) shares of Common
Stock for each ONE (1) share of Class A stock, under conversion procedures as
shall be directed in writing by the Directors and conveyed to any such holder
who shall notify the Corporation in writing of the holder's desire to make such
a conversion.
<PAGE>
These conversion rights for the holder of Class A stock shall not be diminished,
but shall be adjusted accordingly, in the event of any capital reorganization,
reclassification of the stock of the corporation, consolidation or merger of the
corporation with or without another corporation or sale or conveyance of all or
substantially all of the assets of the corporation to another corporation or
other entity or person.
In the event of any liquidation or dissolution or winding up, whether voluntary
or involuntary of the corporation, the holders of Class A stock shall be
entitled to be paid in full both the par amount of their shares and the unpaid
dividends accrued, before any amount shall be paid to the holders of other
stock.
The holders of Class B preferred stock shall be entitled to receive in each year
out of the surplus net profits of the corporation a fixed yearly dividend of TEN
PERCENT (10%) payable as may be authorized by the Directors, before any dividend
shall be set apart or paid on the common stock. The dividends upon the Class B
stock shall be cumulative. The Class B stock shall be non-voting stock.
In the event of any liquidation dissolution or winding up, whether voluntary or
involuntary of the corporation, the holders of Class B stock shall be entitled
to be paid in full both the par amount of their shares and the unpaid dividends
accrued, before any amount shall be paid to the holders of the Common Stock.
In the event of any liquidation or dissolution or winding up, whether voluntary
or involuntary of the corporation, after the payment to the holders of Common
Stock of its par value the remaining assets and funds shall be divided pro rata
amoung the holders of all classes of the capital stock.
<PAGE>
(3) The foregoing amendment was adopted by the shareholders at an annual meeting
of the shareholders held on April 1, 1998.
(4) The number of shares of voting common stock outstanding and entitled to vote
upon the above amendment was 14,737,056.
The number of votes indisputably represented at the meeting was 11,637,474.
(5) The number of shares voted for the above amendment was 11,584,393; against
was 53,081; and 0 abstained was of the Common Stock, being the only class of
stock entitled to vote on the amendment, was sufficient for approval of the
amendments by that voting group.
(6) The foregoing amendment does not provide for an exchange, reclassification,
or cancellation of issued shares of the corporation. However, at the annual
meeting of the shareholders held on April 1, 1998, the shareholders duly
approved a ONE-FOR-FIVE reverse split of the outstanding shares of common stock
of the corporation effective as of April 1, 1998.
Dated: April 1, 1998 NORSTAR GROUP, INC.
By: /s/ Andrew Peck
--------------------------
Andrew Peck
Secretary
<PAGE>
BY-LAWS
OF
NORSTAR GROUP INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of FLORIDA shall
be located in the CITY of Oakland Park, County of Broward. The corporation may
have such other offices, either within or without the State of incorporation as
the board of directors may designate or as the business of the corporation may
from time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 28 day of
March in each year, beginning with the year 1992 at the hour 10 o'clock A.M.,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday such meeting shall be held on the next succeeding
business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders of
not less than per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the
State unless otherwise prescribed by statute, as the place of meeting for any
annual meeting or for any special meeting called by the directors. A waiver of
notice signed by all stockholders entitled to vote at a meeting may designate
By-Laws 1
<PAGE>
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than nor more than
days before the date of the meeting, either personally or by mail, by
or at the direction of the president, or the secretary, or the officer or
persons calling the meeting, to each stockholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at his address
as it appears on the stock transfer books of the corporation, with postage
thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, days. If the stock transfer books shall be
closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for at least
days immediately preceding such meeting. In lieu of closing the stock
transfer books, the directors may fix in advance a date as the record date for
any such determination of stockholders, such date in any case to be not more
than days and, in case of a meeting of stockholders, not less than
days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders
By-Laws 2
<PAGE>
has been made as provided in this section, such determination shall apply to any
adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least days before each meeting
of stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
days prior to such meeting, shall be kept on file at the principal office
of the corporation and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder during the whole time of the meeting. The original stock
transfer book shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at the meeting of
stockholders.
7. QUORUM.
At any meeting of stockholders of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by
By-Laws 3
<PAGE>
proxy, for each share of stock entitled to vote held by such stockholders. Upon
the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation or the laws of
this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
By-Laws 4
<PAGE>
ARTICLE III -- BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its
board of directors. The directors shall in all cases act as a board, and they
may adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be . Each
director shall hold office until the next annual meeting of stockholders and
until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice
than this by-law immediately after, and at the same place as, the annual meeting
of stockholders. The directors may provide, by resolution, the time and place
for the holding of additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of
the president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least days
previously thereto by written notice delivered personally, or by telegram or
mailed to each director at his business address. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
By-Laws 5
<PAGE>
6. QUORUM.
At any meeting of the directors shall constitute a
quorum for the transaction of business, but if less than said number is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the
board, the president or the secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their
services, but by resolution of the board a fixed sum and expenses for actual
attendance at each regular or special meeting of the board may be authorized.
Nothing herein contained shall be construed, to preclude any director from
serving the corporation in any other capacity and receiving compensation
thereof.
By-Laws 6
<PAGE>
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the
directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
By-Laws 7
<PAGE>
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president,
a secretary and a treasurer, each of whom shall be elected by the directors.
Such other officers and assistant officers as may be deemed necessary may be
elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall, when present, preside at all meetings of the stockholders and of the
directors. He may sign, with the secretary or, any other proper officer of the
corporation thereunto authorized by the directors, certificates for shares of
the corporation, any deeds, mortgages, bonds, contracts, or other instruments
which the directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the directors or
by these by-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall
By-Laws 8
<PAGE>
perform all duties incident to the office of president and such other duties as
may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the President or by the
directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
By-Laws 9
<PAGE>
ARTICLE V -- CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or confined
to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the directors may select.
ARTICLE VI -- CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such
form as shall be determined by the directors. Such certificates shall be signed
by the president and by the secretary or by such other officers authorized by
law and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the
By-Laws 10
<PAGE>
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFER OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the
day of in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
By-Laws 11
<PAGE>
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may
be adopted by a vote of the stockholders representing a majority of all the
shares issued and outstanding, at any annual stockholders' meeting or at any
special stockholders' meeting when the proposed amendment has been set out in
the notice of such meeting.
Approved by: /s/ Harry DiFrancesco Date 1-3-92
----------------------------- --------
Harry DiFrancesco, President
By-Laws 12
<PAGE>
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF UTAH
[GRAPHIC APPEARS HERE] CUSIP NO. 656541 20 8
[GRAPHIC APPEARS HERE]
[LOGO APPEARS HERE]
NorStar
GROUP, INC.
AUTHORIZED COMMON STOCK, 150,000,000 SHARES
PAR VALUE: $0.01
THIS CERTIFIES THAT JERRY SAVER
IS THE RECORD HOLDER OF *TWENTY FIVE THOUSAND*
--Shares of NORSTAR GROUP, INC, Common Stock--
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated: JULY 09, 1999
[GRAPHIC APPEARS HERE]
NorStar Group, Inc.
CORPORATE
Seal
UTAH
/s/ illegible /s/ illegible
- ------------------------------- -----------------------------------
SECRETARY PRESIDENT
[LOGO] INTERWEST TRANSFER CO. INC. COUNTERSIGNED & REGISTERED /s/ illegible
P.O. BOX 17136/SALT LAKE CITY, UTAH 84117 ---------------
<PAGE>
STATE OF UTAH
Department of Commerce
CERTIFICATION OF EXISTENCE
AND GOOD STANDING STATUS
THE UTAH DIVISION OF CORPORATIONS AND COMMERCIAL CODE HEREBY
CERTIFIES THAT
NORSTAR GROUP, INC.
is a Utah corporation and is qualified to transact business in the State of
Utah, and that its most recent annual report required by Utah Code Annotated
Section 16-10a-1607 has been filed, and Articles of Dissolution have not been
filed. The Corporation was duly incorporated in Utah pursuant to Utah Code
Annotated Section 16-10a-203 on MARCH 10, 1961 and is currently in good
standing, as appears in the records of the Division.
This certification is not intended to reflect the financial condition, business
activity or practices of this corporation.
File Number: CO 037880
Dated this 12th day
[SEAL OF STATE OF UTAH APPEARS HERE]
of October, 1999
/s/ Lorena P. Riffo
-----------------------------------
Lorena P. Riffo
Division Director of
Corporations and Commercial Code
<PAGE>
STATE OF FLORIDA
[GRAPHIC APPEARS HERE]
Department of State
I certify from the records of this office that NORSTAR GROUP, INC. is a Utah
corporation authorized to transact business in the State of Florida, qualified
on December 10, 1992.
The document number of this corporation is F92000000954.
I further certify that said corporation has paid all fees and penalties due this
office through December 31, 1999, that its most recent annual report was filed
on May 4, 1999, and its status is active.
I further certify that said corporation has not filed a Certificate of
Withdrawal.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Sixth day of May, 1999
/s/ Katherine Harris
Katherine Harris
Secretary of State
[SEAL OF THE STATE OF FLORIDA APPEARS HERE]
CR2EO22 (9-11)
<PAGE>
AGREEMENT AMONG SHAREHOLDERS
OF
VEEARE CITY THE BURBS.COM, INC.
This is an Agreement executed as of this day of August 31, 1999,
between and among NorStar Group, Inc., Com Odyssey, Inc. (Each a
"Shareholder"), each of whom own shares of stock of VeeAre City The Burbs.Com,
Inc., a Delaware corporation (the "Company"), which collectively total 100% of
said shares.
WITNESSETH:
WHEREAS, the parties have caused to be organized under the laws
of the state of Delaware corporation named VeeAre City The Burbs.Com,
Inc., (the Corporation with an authorized capital stock consisting of
3,000 shares of common stock of par value of .01 (the "Stock"); and
WHEREAS, the parties have negotiated concerning certain rights and
restrictions they wish to place on the Stock the allocation or obligations and
responsibilities and the distribution of revenue; and
WHEREAS, the parties have reached an understanding that they wish to
reduce to this writing.
Now, THEREFORE, in consideration of the foregoing, the mutual covenants
herein, and intending to be legally bound, the parties agree as follows:
1. RESTRICTION DURING LIFE
No Shareholder shall assign, encumber, pledge, transfer, or otherwise
dispose of any of his or her shares of the Stock to any person without first
receiving the written consent of the other Shareholders, unless the Shareholder
desiring to make the transfer or encumbrance (the "Transferor") makes an offer
to sell in accordance with the provisions of this paragraph, and such offer is
not accepted.
a. Offer by Transferor. The offer shall be given to the other
Shareholders and shall consist of a written offer to which shall be attached (1)
a statement of Intention to transfer or encumber, (2) the name and address of
the prospective purchaser or lienor (3) the number of shares of the Stock
involved in the proposed transfer or encumbrance, and 4) the terms of such
transfer or encumbrance.
b. Acceptance of Offer. Within 30 days after the receipt of such offer,
the other Shareholders may elect to purchase the offered shares, but
collectively not less than all, of the shares of the Stock involved in the
proposed transfer or encumbrances, the other Shareholders shall exercise an
election to purchase by giving notice to the Transferor. Such notice shall
specify the amount of shares to be
<PAGE>
purchased. The closing of the purchase shall be not more than 60 days after the
30-day notice period. If the Shareholders electing to purchase indicate
collectively an intent to purchase an amount of shares in excess of that
offered, they must allocate the purchase equally among them. So long as the
lowest amount involved for purchase was equal to or greater than the amount
found by spreading the available shares among the electing Shareholders,
otherwise, the shares shall be allocated among the electing Shareholders prorata
based on their notice.
c. Purchase Price of Offer. The purchase price for the shares of the Stock to be
acquired from the Transferor (the "Shares") shall be as set forth in Paragraph 3
below.
d. Closing Purchase. The closing of the purchase shall take place at the
principal office of the Corporation.
e. Release From Restriction. If the offer to sell is not accepted by the other
Shareholders, the Transferor may make a transfer or encumbrance to the
prospective purchaser or honor named in the statement attached to the offer. If
the Transferor fails to make such transfer or encumbrance within 30 days
following the expiration of the time provided above for election by the other
Shareholders, the Shares shall again become subject to all the restrictions of
this Agreement.
f. Exceptions to Restrictions. Notwithstanding any of the foregoing, or any
other provision contained in this Agreement, any Shareholder shall be permitted
to transfer his or her shares to a wholly-owned entity or trust in which the
transferor is the senior so long as such transferee is subject to all the
restrictions and obligations herein and the stock certificates have a legend so
indicating. It is specifically the intent of the Shareholders that the form of
ownership in which the Shareholder holds the stock may be changed so long as no
other parties are added who can either vote the stock or succeed to the
Shareholder's interest hereunder. It is permissible, however, that a successor
owner for purposes of estate planning can exist for a limited period of time.
Upon such succession, however, it shall be incumbent upon the other Shareholders
and the corporation or promptly value the corporation and pay the succeeding
heirs the full value for said shares. Valuation of such shares shall be as
provided elsewhere herein.
2. PURCHASE UPON DEATH
Upon the death of an individual Shareholder (the "Decedent"), all the Shares of
the Stock owned by him or her, and to which the shareholder, the shareholder's
personal representative or successor Trustee shall be entitled (the "Decedent's
Shares shall be sold and purchased as herein provided.
a. Obligation To Purchase. The other Shareholders shall purchase from the
Decedent's successor in interest and the Decedent's successor in interest,
including but not limited to a personal representative shall sell to the other
Shareholders, all the Decedent's Shares at the purchase price set forth in
Paragraph 3.
b. Closing. The closing of the purchase and shall take place at the principal
office of the Corporation on a date selected by the other
<PAGE>
Shareholder, which shall not be more than 90 days following the date of the
qualification of the personal representative or more than 15 days following the
collection of any and all insurance proceeds from any insurance policy carried
over by the other Shareholder an the life of the Decedent, whichever is later.
C. Insurance. If the other Shareholders shall receive any proceeds of any
policy on the life of the Decedent, such proceeds shall be paid to the
Decedent's personal representative or successor in interest to the extent of the
purchase price of the Decedent's Share against delivery of the certificates to
the other Shareholders Payment thereof shall be deferred until 90 days after the
date of qualification of the Decedent's personal representative, or 16 days
following the collection of insurance proceeds, whichever is later. However if
the proceeds are Insufficient to pay for all the Decedent's Shares, the balance
shall be purchased as set forth in subparagraph d below.
d. Balance of Purchase Price. The balance of the purchase price remaining
after credit for any insurance proceeds shall be made at the closing.
3. PURCHASE PRICE
The Shareholders agree that the value of each share of the Stock at the
date of this Agreement is $ 0.01. The Shareholders may at any time reconsider
the value of each share owned by the Shareholders and any agreement on a new
value shall be endorsed on Schedule "a" attached hereto and made a part hereof.
If the Shareholders have not unanimously agreed on a value within a three-year
period, the value of each share shall be determined and agreed upon by the
personal representative of a Decedent or a Transferor, as the case may be, and
the purchaser, If they are unable to come to an agreement within 10 days after
the option or obligation to purchase Shares arisen, the value of each share
shall be determined by arbitration as follows: the purchaser(s) and the personal
representative of Decedent or the Transferor, as the case may be. Shall each
name one arbitrator. If the two arbitrators cannot agree upon tile value of the
shares, they shall appoint a third arbitrator, pursuant to the commercial
arbitration rules of the American Arbitration Association, and the decision of a
majority of the three arbitrators shall be binding on all parties.
4. INSURANCE
NOT APPLICABLE
5. PURCHASE OF INSURANCE POLICIES ON TERMINATION
NOT APPLICABLE
6. RESTRICTIVE LEGEND DEPOSIT OF CERTIFICATES
The Shares of stock Issued to NorStar Group, Inc., and Com Odyssey,
Inc. will have a restrictive legend indicating such shares are subject to the
requirements of this Agreement.
7. RESTRICTION ON THE ISSUANCE OF NEW SHARES.
The Shareholders agree that no new Shares, common or preferred, shall
be issued with respect to the corporation without the express written consent of
100% of all of Shareholders. It is
<PAGE>
specifically the intent of the parties hereto to prevent any dilution of the
ownership or equity interest of the Shareholders. All other constraining
documents for the corporation shall be prepared, or amended, to conform to this
prohibition.
8. COMPENSATION PAYMENTS
The Shareholders also specifically agree that available income shall be
paid from the corporation pursuant to the provisions contained in the various
Employment Agreements with the employees of the corporation who, in each
Instance, also happen to be Shareholders. It is the intent of the Shareholders
that the services being provided by these employees/Shareholders is the value of
the enterprise and the compensation paid to the individuals is paramount for
corporate purposes. Accordingly, no other distributions or other participation
In the profits of the corporation shall be available to the Shareholders.
9. TERMINATION
This Agreement shall terminate upon anyone of the following events:
a. The written agreement of all Shareholders;
b. The dissolution, bankruptcy, or insolvency of the Corporation; or
c. At such time as only one Shareholder remains the Stock of the others
having been transferred or redeemed.
10. ENDORSEMENT ON STOCK CERTIFICATES
Upon execution of this Agreement, the certificates of Stock subject
hereto shall be surrendered to the Corporation and endorsed as follows:
"This certificate is transferable only upon compliance with the
provisions of an agreement dated August, 1999, among the holder and others, a
copy of which is on file in the office of the Secretary of the issuer." All
certificates for Stock hereafter issued to the Shareholders shall bear the same
endorsement.
11. SPECIFIC PERFORMANCE
The Shareholders agree that the shares of Stock of the Corporation
cannot be readily purchased, sold, or evaluated in the open market, that they
have a unique and special value, and that they would be irreparably damaged if
the terms of this Agreement were not capable of being specifically enforced. For
this reason the Shareholders agree that the terms of this Agreement shall be
specifically enforceable. The Shareholders further agree that any sale or
disposition, including an Involuntary transfer or a transfer by operation of
law, that does not strictly comply with the terms and conditions of this
Agreement may be specifically restrained.
12. FURTHER ASSURANCES
Whenever a Shareholder shall, pursuant to this Agreement, purchase
Shares of Stock. Each Shareholder and the personal representatives of any
Decedent shall do all things, and execute and deliver all papers, necessary to
consummate the purchase. Each party agrees to perform any further acts and to
execute and deliver any
<PAGE>
further documents that may be reasonably necessary to carry out the provisions
of this Agreement.
13. NOTICES
Any and all notices, designations, consents, offers, acceptances, or any
other communications provided for herein shall be given in writing by registered
or certified mail, which shall be addressed to the Shareholder as follows:
Name Address
---- -------
NORSTAR GROUP, INC. 6365 N.W. 6th WAY
FORT LAUDERDALE, FL 33309
COM.ODYSSEY, INC. P. O. BOX 1811
BRANDON, FL 33509-1811
14. SEVERABILITY
If any provision of this Agreement is held to be unenforceable or
invalid by any court of competent jurisdiction, the validity and enforceability
of the remaining provisions shall not be affected thereby.
15. CONSTRUCTION
Whenever used herein, the singular number shall include the plural, and the
plural number shall include the singular, and use of any gender shall include
all genders. The paragraph headings in this Agreement are for convenience of
reference only and shall not be used as an aid in the construction of any
provision. This Agreement shall be deemed to have been prepared by each of the
parties and there shall be no canon of construction applied hereto for or
against any party by reason of the preparation hereof.
16. GOVERNING LAW
This Agreement has been executed in and shall be governed by and construed
in accordance with the laws of the state of Delaware applicable to agreements
made and to be wholly performed in that state.
17. INUREMENT
Subject to the restrictions against transfer or assignment as herein
contained, the provisions of this Agreement shall inure to the benefit of and
shall be binding on the assigns, successors in interest, personal
representatives, estates, heirs, and legatees of each of the parties. Each
Shareholder agrees to insert in his or her Will a direction and authorization
to the personal representative to fulfill and comply with the provisions hereof,
and to sell his or her Shares in accordance herewith. Each Shareholder agrees
that he or she will not hypothecate or otherwise create or permit to exist any
lien, claim, or encumbrance upon any of his or her shares at any time subject
hereto, other than the encumbrance created by or an encumbrance permitted by
this Agreement.
18. AMENDMENT
<PAGE>
This Agreement may be amended only by the written consent of all of the
parties to this Agreement at the time of the amendment.
19. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
concerning the subject matter contained herein. There are representations,
agreements to be entered into, arrangements, and understandings, between and
among the parties relating to the subject matter of this Agreement that are to
be fully expressed in the "Director's Orientation Survey"; "Organization Data";
"Legal Compliance Survey"; "Officers and Directors"; "Professional Advisors";
"Key Personnel"; "Committees"; "Strategic Planning Survey"; "12 Month Goals";
"Projects to Complete Goals"; "6 Month Goals"; "Projects to Complete Goals"; "3
Month Goals"; "Projects to Complete Goals"; "Critical Issues"; "Key Project
Control"; "Project Activity Record"; "Project Review/Update Schedule"; "Board
Meeting Survey"; "Items For Board Action"; "Directors Meeting Schedule";
"Meeting Agenda"; "Executive Report Summary"; "Committee Report Summary";
"Minutes"; "Financial Management Survey"; "Pro-Forma Income Statements";
"Pro-Forma Balance Sheet"; "Projected Cash Flow Statement"; "Projected Income
Statement and Balance Sheet"; "Financial Comparison Analysis"; "Financial
Performance Analysis", copies of which are attached herein.
20. COUNTERPARTS
This Agreement may be executed in one or more counterparts and in making
proof of this Agreement it shall not be necessary to produce or account for more
than one fully executed counterpart hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
Attest: NorStar Group, INC.
By:
------------------------ -------------------------
President
Attest: Com.Odyssey, Inc.
By: /s/ illegible
------------------------ -------------------------
President
<PAGE>
SHAREHOLDERS
The undersigned acknowledges receipt of certificates representing the
Stock of VeeAre City The Burbs.Com, Inc. owned by the Shareholders, as recited
in Paragraph 6 of the foregoing Shareholders Agreement.
-------------------------
SCHEDULE "A"
SCHEDULE "B"
The undersigned Shareholders hereby agree in accordance with the
Agreement Among Shareholders dated September, 1999, that the value of
the stock of VEEARE CITY THE BURBS.COM, INC a Delaware corporation as of this
day of September 1999 is $ per share.
BY:
------------------------
By:
------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 422,524
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 422,524
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 451,347
<CURRENT-LIABILITIES> 192,843
<BONDS> 0
0
0
<COMMON> 154,938
<OTHER-SE> 103,566
<TOTAL-LIABILITY-AND-EQUITY> 451,347
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,143,847
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,143,847)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,143,847)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,143,847)
<EPS-BASIC> (.22)
<EPS-DILUTED> (.22)
</TABLE>
